The Impact of Corruption on Bulgaria’s foreign economic relations

By: Pete Kristofferson

Special Guest Writer

ceo@globaltradeofamerica.com

Washington D.C. – USA

With more than 20 years of leadership experience in the public and private sectors, Pete Kristofferson founded Global Trade Alliance of America, Inc., in 2021. Based in Washington, D.C., and New York City, the organization is a service-oriented import and export trading company that helps accelerate the exchange of goods and services. Through comprehensive partnerships worldwide, from shipping logistics to U.S. government-backed trade finance, the Global Trade Alliance of America has developed networking capabilities for profitable international business. Their dedicated experts and community managers are available to offer advice during every stage of importing activity including the area of import and export trade financing alternatives. Serving as an effective advocate of mutual business interests, Global Trade Alliance has worked with hundreds of clients around the globe. Their state-of-the-art technologies use machine learning and cloud-based services with social networking capabilities, comprehensive content, and corporate advisory. With a philosophy rooted in extensive market knowledge and personal relationships, the objectives of each entity involved are carefully evaluated to help ensure flawless and profitable transitions.

As the leader and CEO of the thriving firm, Pete oversees the organization and works to maintain strong, positive relationships with elected officials at the federal, state, and local levels. He also provides assistance with international cooperation, diplomatic relations, and lobbying at the local level in the strategic area of Washington, DC, and throughout the United States and Bulgaria. “It makes me happy to have such a great atmosphere around me, where I’m able to travel and get more deals done successfully with my business partners of the world,” he states. “Bringing positive energy with my lobbying from officials, politics, governmental professionals, and diplomacy is really what I enjoy most.” Pete helms a triad of other ventures as well, serving as president, CEO, and co-founder of Acdaris Inc. and Pete Luxe-Worldwide Capital Media Group, Ltd. He’s also president and co-founder of Global Trade Automotive Alliance, Inc- an innovative electric car corporation.

Pete holds bachelor’s and master’s degrees from the Varna Free University “Chernorizets Hrabar.” He’s an executive board/advisory council member at Executive Programs for the School of Business at George Washington University and the University of Richmond and is currently pursuing a Ph.D. from the University of National and World Economy.

“Success should be measured not so much by the position one has reached in life as by the obstacles one has overcome while trying to succeed. The secret to a successful life is to find out what you are meant to do and then make it happen.”-Pete Kristofferson.

Abstract:

 The article aims to present, first of all, the system-forming aspects of corruption and to present the theoretical positions on the matter.  After which, on the basis of comparative analysis, outline the development trends in chronological order and provide the formulation of an idea for a mechanism for the prevention of this process and state of the environment, which is negative for the state and society.  The author aims to propose soft measures to create a state policy in terms of counteraction and prevention of corruption, as a reformed model because the existing ones are not functioning and the levels of corruption have been continuously increasing in recent years.

 Keywords: corruption, prevention, state policies

 JEL: E26 (informal economy, illegal economy)

 Exposure:

 This highly sensitive term for democratic societies, corruption, is an extremely complex phenomenon of modern social relationships.  In general, it is related to the empowerment of a certain type of entity and the provision by them of a different type and nature of services to other entities for an unregulated remuneration or a certain type of enrichment.  The relevance of issues related to corruption and corrupt interaction in Bulgarian society is determined by the following:

•from the fact that, despite the existence of numerous strategies, programs and plans to fight corruption, it not only exists but also permeates all layers of Bulgarian society;

 •​due to the spread of corruption in important sectors such as health care, political management, and central and local government, which seriously threatens both the basis of the country’s democratic governance and national security.

 Corruption finds expression in the research and analysis of political scientists, sociologists, psychologists, and many other researchers, but despite this, there is no single definition of this phenomenon.

 ​In the scientific literature, a number of authors present their views and definitions of corruption.  Some of them come close to my views as described by (Dimov, M. 2004) “Corruption is a complex phenomenon”.  If considered in its most general sense, it represents a special type of social communication involving two, often ideological parties – a public servant and an interested citizen.”  Other authors link corruption to the private sector as well – for example, according to (Rose-Ackerman, S. 2010) investigators and high-level managers remain indifferent to the problems of corruption until one of the “victims” of unfair treatment files a complaint with them.  Moreover, for now, the only punishment for a “sinning” employee is dismissal.  Adhering to this behaviour, the bureaucrats will continue to “do their jobs” until their regular customers are satisfied. Moreover, the bribe giver is relatively indifferent to whether his act remains uncovered or not.  . The probability of uncovering the bribe depends not only on its size but also on the benefit to the one who accepts it. The amount of the sanction may also depend on these variables. In this sense, the main element of corruption is mutual motivation, and its practical meaning – the effectiveness of the bribe.

Another authoritative author (Zlatanova, V. 2017) considers corruption as a phenomenon related to deviant or deviant behaviour.  According to the author, in the conditions of globalized crime, corruption is an independent phenomenon, existing in parallel with a crime.  There is a functional dependence between crime and corruption, and it makes corruption the most powerful factor in the continuous reproduction of serious conventional and organized crime.  V. Zlatanova cites a definition that was adopted by the Council of Europe in 1996 and according to which corruption is:

 “1.  abuse of authority (power);  2. the powers are granted to individuals or a group;  3. the abuse of powers is carried out during or on the occasion of the performance of a certain activity;  4. the activity is in the field of economic, financial, administration and business management;  5. abuse of authority is carried out for the purpose of personal or corporate benefit.”

 ​Other concepts that are presented by the authors and that are related to corruption are the following:

 •​illegal or immoral economic activity involving the receipt of financial or material funds from the participants involved, with the focus being on those who accept such funds;

 •​corruption activities are related to different levels of the state apparatus, where officials abuse power, or more precisely, officials use power for personal enrichment in order to obtain certain goods and services that they cannot obtain in any other way;

 •​corruption is defined as the deliberate neglect or non-fulfillment of duties that are assigned by the position held or the unjustified use of power with motives to gain some personal advantage.  Thus, corruption is a disintegration of power with the motive of gaining personal benefits using any methods under certain circumstances.  For this reason, understanding corruption in a certain way requires the ability of those in power to distinguish between the public and private spheres.

Considering the above, we can define corruption as an act in which a person holding a given power, regardless of whether that power is in the private or public sector, carries out an unregulated, illegal, or unethical activity, for which he receives a benefit from another person or persons.  The benefit can be of different natures – money, services, gifts, and others.

 Analyzing the regulatory environment and legal acts shows us that there is a rich judicial practice on the issues related to “bribery”.  As far as this matter is concerned, the framework of the guiding principles is outlined by some points of Decree No. 8 of 30.11.1981.  by n.d.  No. 10/1981, Plenum of the Supreme Court.  Bribery is by its very nature a transaction, but because it is against the law and made a crime, it is void.  It is done with direct intent.  In the Special Part of the Criminal Code, this crime is covered by Art. 301 – 307a:

 ​”- Corruption in the economy and the financial sphere.  The conquest of the economy through corruption reveals the evolution in the strategies of organized crime – the gradual abandonment of force methods and the improvement of corrupt practices that prevail in the activities of established international criminal organizations.  The financial sphere is the subsequent one in which organized crime settles, after its intellectualization, acquired experience, and general destabilization of financial institutions as a result of international money laundering activity.  In fact, this is perhaps the area where corruption and organized crime are most closely linked.”

 ​ Due to the variety of forms in which corruption manifests, there is a differentiated attitude of different social groups towards it.  ​Relatively often, in the various spheres of public space, one act can be called corrupt, while another can be outside the scope of corruption.  In this sense, the same act can be characterized as a crime, as an administrative offence, or as an act for which disciplinary responsibility can be sought.

 The question has been repeatedly raised that corruption is far from being a phenomenon neither only for Bulgaria (Anti-corruption reforms in Bulgaria on the threshold of membership in the European Union, 2022), nor only for the countries of the European Union.

Source: Index 2021 year: http://transparency.bg, visit.  June 2022

 THE INDEX OF BULGARIA

 As the research statistics show, Bulgaria has been steadily moving in a corridor of values ​​between 41 and 44 points over the last 10 years without being able to make at least a change in the direction of development.

 The “Old Democracies” have also been rocked by corruption scandals.  Given this, in Europe there are many adopted documents and acts directed against corruption, as an attempt to systematize these acts can be seen in Appendix 1 to the thesis.  It is clear from the annex that many political decisions aimed at fighting corruption have indeed been taken by various institutions in the EU.  The Council of Europe also adopts numerous documents, such as:

 •​Criminal Convention on Corruption of the Council of Europe (SG, No. 73 of 26.07.2002).

 •​Civil Convention on Corruption of the Council of Europe (SG, No. 102 of 21.11.2003).

 •Additional Protocol to the Criminal Convention on Corruption of the Council of Europe (SG, No. 35 of 22.04.2005).

 ​The Organization for Security and Cooperation in Europe adopts the following document: Convention on Combating Bribery of Foreign Officials in International Commercial Transactions (Government Gazette, No. 61 of 07/06/1999).

 ​The United Nations accepts the following documents:

 • UN Convention against Transnational Organized Crime (Government Gazette, No. 98 of 6.12.2005).

 •​United Nations Convention against Corruption (Government Gazette, No. 89 of 3.11.2006).

 It can be summarized that corruption is accepted by international organizations as an exceptional problem against which an institutional and normative struggle should be waged.

The manifestation of corruption is far from being associated only with the giving of money – a number of other assets and benefits can also be provided as a bribe – for example – promises for a certain type of service, promotion in office, intercession, and many others (Zlatanova, V.,  2017).  Apart from the material and purely practical side of the act of corruption, there are other features of this type of social communication.  In its essence, the act of corruption is an illegal means to achieve certain goals and as such is prosecuted by law.  However, a number of moral restraints, or ethical norms and standards, can be woven into personal commitment.  For the person faced with the alternative of whether to successfully solve his problem with the bureaucracy using illegal means or to remain “clean” before his conscience and before the law, is an emotional dilemma that in many cases determines whether he will become a party to the corrupt deal or  No. The dominant position of one or the other end of the scale “successfully resolved problem-clear conscience” is the basis of the citizen’s attitude towards corruption.  That is why this “ethical” concept should be considered in the context of the other elements of the corruption act.

 The issue of the manifestation of corruption from a psychological point of view is extremely interesting.  After all, we all know that corruption is a vice of society, it is related and defined as a criminal activity, but nevertheless, for one reason or another, corruption exists.  Therefore, it is interesting to discover the mental mechanisms of social interaction that predispose or prevent the manifestation of corrupt actions.

 The topic of money is considered within various psychological currents and finds a place in both psychoanalysis and behavioural theories.  There is a wealth of research that demonstrates that individuals exhibit different attitudes toward money, attach different meanings to it, and exhibit different behaviours.  Classic in this regard is the work of Fernheim, who demonstrates that men are more interested in money than women, that young people view money more as a means of power and dominance, although they are less careful with their spending, and that people those with a lower educational level are more obsessed with money and use it as a means of flaunting power.

Do the mentioned results mean that it is precisely these groups that we can accept as the most susceptible to corruption?  It would not be correct nor scientifically validated to derive such a direct correlation for several reasons.  It is true that the first and strongest association with the word corruption is money, that is, the illegitimate “giving” of money from one individual to another in order to benefit the giver. But the act of corruption is not always measured in monetary terms. This thesis is supported by authors such as Susan Rose-Ackerman, a professor at Yale University, who believe that corruption has other varieties. It can take the form of favours, gifts, and reciprocal concessions. Other authors studying the phenomenon disagree with these interpretations and argue that gift-giving is part of the national or company culture.

 The value system is a factor of fundamental importance for the in-depth study and understanding of the phenomenon of corruption.  The values ​​that are significant for the individual become, respectively, either a barrier or a tool that facilitates corrupt behaviour.  The value system dictates the choice and implementation of a life strategy and hence acceptable or unacceptable behaviour patterns for the individual.

 ​Another major personal factor of a psychological nature directly related to corruption is identity.  The identity of the individual begins to be built already in his childhood through the introduction of positive or negative behavioural models copied by the significant subjects for him.  In this sense, at a later stage of personality development, corrupt actions can also be learned, as long as we have the example of someone important to us or the example of an individual achieving success based on these actions.  In this direction, the environment also has an influence.  If the individual acts in a social environment in which there is no transparency, order, strict role allocation, clear rules, and strict sanctions, then logically the individual would show a greater tendency to corrupt actions since he will calculate the risk as minimal and the benefit as maximal.  Such prerequisites definitely unlock attitudes toward acts of corruption.

The status in the organization or in the social environment of the individual is also important.  Usually, people in high management levels have the feeling of impunity and complete control over the situation, which in itself is also a prerequisite for the emergence of corruption in these environments.

 Another influencing factor could be the subjective feeling of well-being and satisfaction (valuation).  If the individual in his organization or social environment feels dissatisfied, thinking that he puts in a lot and does not get enough, or that he is not really valued, then he will definitely have a predisposition to illegitimate behaviour, including corruption, in order to overcome the frustrating feeling of inferiority and under-appreciation.

 Last but not least, as a factor for the presence of the phenomenon of corruption, it is necessary to note the influence of the attitude of individualism-collectivism.  It is logical to assume that a pronounced individualist could act corruptly for his own benefit, without caring whether this act would violate collective principles and norms.  A collectivist-oriented individual operating in an environment that accepts corruption as a matter, of course, would not hesitate to act in this way, even if he considers it immoral, because of his conformity to the group.

 There are also a number of factors of a personal and socio-psychological nature that are related to the phenomenon of corruption.  The perception of corruption has another side.  The bystander, i.e. the person who does not participate in it also has his own moral position.  They largely influence his attitude towards the giver or taker of the bribe, and more generally, his civic position.  For one who does not directly participate in a phenomenon, is normatively perceived as illegal, the evidence of its manifestation in most cases will be perceived negatively.  But this will continue until the moment when he directly engages in certain corrupt behaviour and is convinced of its effectiveness, or until the moment when his opinion begins to be influenced by external, significant factors for him.

 Conflict of interest is also related to corruption.  The latter can be considered in two aspects – as situations that presuppose real corruption problems and the public perception of the problem.  The conflict of interest is perceived as one of the forms of corruption that citizens, in their capacity as users of services, encounter on a daily basis in their contacts with public administration officials.  In the event of a conflict of interest, three types of liability can be sought – disciplinary, administrative or criminal.

In addition to the incompatibility of interests, the conflict of interests expresses something more – the contradiction of interests, their mutual exclusion due to the difference in the goals and the cause that one and the other interests serve.  However, there is a significant difference between incompatibility and conflict of interest that should be highlighted: incompatibility constitutes legal obstacles to the parallel reconciliation of the relevant public position with a certain profession or activity.  According to their content, these obstacles can be classified into three main groups:

 •​for occupying another public position;

 •​​for certain political or other public activities;

 •​for a certain economic activity.

 ​These activities can be of a different nature – participation in management and control bodies of economic entities, presence of another employment or service legal relationship, etc.  It is also possible to divide by other criteria – incompatibility that existed at the time of entry into public service or arose in the course of its implementation;  which can be removed and for which this is not possible, etc.  These prohibitions are not unified.  They have different content for different government positions.  Their content is determined by the legislator in the Constitution and in several dozen administrative laws according to the specifics of the respective position.

 ​In legal theory, incompatibility is defined as “legally not allowing the exercise of activities or the performance of actions that contradict the essence of the position held, limit or eliminate independence in the exercise of authority or duty, harm the dignity of the person and the good name of authorities or the institution”.

 ​Corruption is influenced by the public situation and external factors, such as external factors of corrupt behaviour can be both the wide publicity of specific cases of taking or giving a bribe, and the general satisfaction with the public system in general.  These factors have a wide social effect, as they call into question not only the legitimacy of a certain political system, but also the attitude towards the state’s ability to cope with the negative processes of public life.  According to authors such as Williams, the mechanisms and processes that influence the transformation from vice to virtue are not so obvious in practice.  However, the higher the awareness, the more active the media are.  If corruption spreads in conditions of covertness and indirection, then individual cases of political corruption will not receive publicity or more detailed examination, except for the most egregious of them.  In this sense, democratization and the development of society are essential factors limiting corruption.

The following main conclusions can be drawn:

 •​corruption is an act that is usually associated with public power, but in practice -corruption can also occur in the private sector.  It is a type of malpractice that leads to unjust enrichment or receiving some type of benefit in return for providing a service;

 •​corruption exists, both in political and administrative positions, and besides small and large, it can be organized or unorganized.  While corruption facilitates criminal acts such as drug trafficking, money laundering or prostitution, it is not limited to these and is often linked to activities that are themselves legal.  In this case, the service provided was not necessarily in violation of legal procedures, but rather was performed inconsistently with democratic standards;

 •​corruption attitudes are influenced by a number of factors and conditions, and to some extent, corruption depends on the peculiarities of the national culture, the degree of economic development, the adopted legislation, and others.

 Conclusion:

 assessment of threats from the spread of corruption to the functioning and development of democratic society and governance in Bulgaria and national security.  From the analyses made on the topic, the following main conclusions can be defined:

 •​corruption is a phenomenon that is inherent in modern society, and this phenomenon is present in every sphere – both in the public and the private sector;

 •​​corruption is based on the opposition of private and public interest;

 • many prerequisites exist for the presence of corruption, such as ineffective legislation, lack of control, personal corrupt attitudes, degradation of values ​​, and others;

 •​corruption is a risk for the modern society and for national security, as it favours the development of organized crime and undermines trust in democratic institutions;

 •​there are many policies, strategies, rules, and others against corruption, but the presence of a high corruption index in Bulgaria shows that these policies are ineffective.

 We can conclude that other ways and methods of an effective anti-corruption fight should be sought and they are in properly formulated and defined state policies.

Contact:

        Pete Kristofferson

Founder & CEO — Global Trade Alliance of America, Inc.

Website: https://www.globaltradeofamerica.com/

LinkedIn:  https://www.linkedin.com/in/pete-kristofferson-74341293/

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A very special thank you to our dedicated EU Bureau Chief, Albena A. Jones has invited Pete Kristofferson as a Special Guest Writer to be featured on a topic about an EU matter.